Ocwen executive chairman to resign in New York settlement

Ocwen Financial Corp’s executive chairman, William Erbey, will step down as part of a legal settlement with New York’s financial regulator, the Wall Street Journal reported, citing people familiar with the matter.

Under an agreement to be signed as soon as Monday, Ocwen will acknowledge that it didn’t properly deal with distressed homeowners, may have saddled them with excessive charges from affiliated companies and failed to maintain adequate systems for servicing hundreds of billions of dollars in mortgages, the Journal said.

New York Financial Services superintendent Benjamin Lawsky accused the company of harming hundreds of thousands of borrowers by sending backdated letters about loan modifications and foreclosures, which violated state and federal laws.

Benjamin Lawsky, superintendent of the New York State Department of Financial Services, speaks in Albany, New York on March 7, 2012.Photograph by Mike Groll — AP/file

In October, Ocwen said it set aside $100 million for a potential settlement with the New York banking regulator.

Ocwen is also facing scrutiny from New York state and the federal government over whether the mortgage servicer improperly stalled short sales of property to collect more fees, Bloomberg reported last week.

Erbey will step down by mid-January as part of a wide-ranging proposed consent order with the state Department of Financial Services, the Journal reported.

Ocwen will also pay $150 million toward New York housing programs and aid to foreclosed homeowners and appoint two outside directors subject to state consultation, the report said.

The state will appoint a new outside monitor to scrutinize every aspect of the company’s operations to insure they are changed to better protect borrowers, the Journal said.

Ocwen will also be prevented from making acquisitions and expanding until it satisfies the state that it has reformed its systems to protect the rights of New York borrowers, the Journal reported.

Representatives of Ocwen and the New York Department of Financial Services could not immediately be reached for comment outside regular U.S. business hours.

JPMorgan’s Dimon: There will be wins, losses in battle against cyber threats

JPMorgan Chase should be concerned with a suddenly turbulent market, but it’s the ongoing threat of cyber attacks that’s keeping the bank up at night.

On Tuesday, CEO Jamie Dimon addressed on the company’s third-quarter earnings call the recent, massive breach of its customers’ personal information. For America’s largest bank by assets, the reminder of the incident struck a bitter note in an otherwise positive report.

In October, the bank JPM revealed that contact information for 76 million households and 7 million small businesses had been compromised. It was not the only financial firm impacted by the breach—possibly a dozen others are included—but it’s among the highest-profile. (Unlike the recent breaches at Target and Home Depot, JPMorgan claims not to have lost payment card information. Rather, attackers may have obtained stolen names, mailing addresses, email addresses, and the like.)

Finally, before I move on—as you are aware, JPMorgan and certain others in the financial services industry experienced cyber-attacks this quarter. We are taking every step to protect our customers and our firm, but these attacks highlight the need for continued and increased cooperation among businesses and the government to systematically reduce and [root out] cyber threats. We are committed to doing our part. To date we have not observed elevated levels of fraud related to this matter.

During the question-and-answer part of the call, a Morgan Stanley analyst brought up Dimon’s recently stated commitment to double cyber security spending. Dimon clarified the point, estimating that the company’s cybersecurity spending “will double over the next four or five years.”

Lake supported Dimon’s claim. “It’s entirely reasonable to assume that we’ll continue to increase our investments over the course of the next several years,” she said. “It will be larger. We’ll let you know.”

In a previous annual report, the company devoted an entire subsection to its cyber strategy and apportioned $250 million to digital security. That amount could grow to half a billion dollars by 2020 based on its new projections.

Dimon also highlighted the importance for private industry and government to team up against hackers. Security, he cautions, is no solo job.

“This is one area where the government and businesses have been collaborating really well,” he said. “The government sees all kind of attacks and they have a fountain of information.” Private industry “self-collaborates” when things go wrong, Dimon said. The concern for adequate protection runs horizontally across the industry and vertically through the supply chain. “We’ve identified this as a huge effort. We’ve been very good at it,” he said. “The most recent breach—which we’re not going to make excuses for—we’ll invest any and all things we just do to get it right. Our customers are protected, which is critical. But we don’t want these things to be happening.”

Dimon continued. “It’s going to be a battle. You’ve already seen a lot of very, very serious [data]—far more serious than personal data—being taken: Social Security numbers, security codes, account numbers, et cetera. We do think that, unfortunately, there are going to be some wins and losses in this.”